Asmallworld AG (ASWN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the ASMALLWORLD conference call regarding the 2023 full year results. [Operator Instructions] Let me now turn the floor over to your host, Jan Luescher.

Thank you very much for the introduction. I would like to welcome everyone to this earnings call for ASMALLWORLD’s 2023 full year results. My name is Jan Luescher. I'm Chief Executive Officer and I will lead you through today's call. As always in these calls, I will touch on the financial and operational highlights for the year, and I will also provide additional information to put those results into context so you can better understand the headline numbers in where the business stands today. And in the end, we will also open up for a Q&A session, and I will answer any open questions that you may have at that point. The presentation that I'm using to illustrate our performance is available for download on our corporate website. In case you haven't downloaded it yet, I recommend that you do so now. It will make it easier for you to follow my explanations. You can find the link to the presentation in this morning's press release or you can go straight to our corporate website. The URL is www.asmallworldag.com. And once you're on the site, you'll have to navigate to a section called Investors and the submenu called Investor Documents and there at the top, you should find a document called 2023 Full Year Results Presentation, and this is the document that I will be using for this call. So great. Let's get started and get to the presentation. On Slide #2, there's always a brief recap of ASMALLWORLD's mission statement. So ASMALLWORLD is the world's leading travel and lifestyle community and in short, we inspire our members to travel better, experience more and make new connections. In terms of businesses, Page 3 shows a brief overview of the businesses that make up our group or what we call the ASMALLWORLD travel and lifestyle ecosystem. And now, there are actually 9 businesses in our ecosystem. At the center is the ASMALLWORLD social network, which attracts an affluent customer segment with a high willingness to spend on travel and experiences. And then this audience creates demand for our other businesses, ranging from ASMALLWORLD events to the world's finest clubs or bespoke travel arrangements and hotel bookings with our smaller private and smaller collection businesses. In short, with the ASMALLWORLD social network, we attract the right customers that we want to have and then we aim to increase our share of wallet with those customers with our other businesses. What is new this time around are 2 things. First, the addition of a ASMALLWORLD DISCOVERY to this chart, which wasn't here a year ago. Our -- it's a new business that came out of the partnership with Global Hotel Alliance. And then the second new addition is jetbeds.com, an online flight bookings tool that we acquired late last year. I will mention both businesses a bit later in this call, but I'm just showing it here for the overview. So, so much for the quick introduction, let's move straight to the financial results on Page #5. In short, 2023 was another record year in terms of sales. It was the strongest sales period in the company's history. We passed the CHF 20 million mark, growing by 15% from CHF 18.5 million to CHF 21.1 million (sic) [ CHF 21.2 million ], which we're all very happy about. The EBITDA came in 16% lower, that's CHF 2.1 million at the same time, but at the same time, net income was still up by 5% compared to the previous period. One of the reasons for the good net result was that the financial investment in Global Hotel Alliance started to pay off with us receiving USD 300,000 in dividend payments from Global Hotel Alliance and that added straight to our bottom line. Our cash balance stood at CHF 3 million by the end of the year, and we had investment securities to the extent of CHF 1.2 million on our books, so around CHF 4.2 million of the cash and cash equivalent funds and the CHF 1.2 million in securities by now, as of today, have already been converted back into cash. So that was already converted back since we had the closing of the books at the end of 2023. So in short, we had great sales and net income growth and a very healthy cash balance. So that was probably 1 highlight of the year. And the second thing that we focused on in 2023 was the strengthening of our balance sheet which is sort of laid out on Page #6. For context, you may recall that in 2022, we became self-funding. So we started to generate more funds out of the business than the business needed, which was a major milestone for us moving from burning cash to actually earning cash. And in 2023, we focused on strengthening the balance sheet and to do so, we actually drastically reduced the debt that we had on our balance sheet. We did this in 2 steps. One was that we conducted a capital increase in October last year, where we issued 2.7 million in new shares and we used the proceeds from this increase to convert outstanding debt into shares. And the second step was that we used some of our cash reserves and their operating cash flow to repay another part of our debt. So specifically, we repaid all outstanding debt to Pellegrino Capital, our anchor investor, who we owed about CHF 4.4 million. CHF 3.8 million of that amount were actually repaid as part of the conversion of debt into new shares and the remaining CHF 600,000 were repaid in cash out of our cash funds. In addition to the repayment to Pellegrino Capital, we also repaid CHF 400,000 of our outstanding bank loans and about CHF 140,000 in COVID loans to the Swiss government. So in total, we reduced our debt by CHF 4.9 million or 54%, bringing it from CHF 9.1 million from the beginning of the period to CHF 4.2 billion by the end of the period, which really is quite significant and puts us in a very good position, because the result is now that we have a healthier balance sheet than ever because the remaining CHF 4.2 million could actually be repaid with our current cash position of CHF 3 million and our investment assets of CHF 1.2 million, which puts us in a comfortable position where, if we wanted to, we could repay all remaining debt instantly and become entirely debt-free as a company, which is a great option to have. Also, in addition to what happened in 2023, I just want to also quickly mention what happened since then in this context. Because in 2024, we have also decided to repay the remaining outstanding government COVID loan of CHF 570,000 to the Swiss government and that further reduced ASMALLWORLD's debt. And then we repaid another CHF 400,000 off our bank loan. So in total, bringing down our outstanding debt by another CHF 1 million from CHF 4.2 million to CHF 3.2 million since the close of the books. This is obviously not in the 2023 period, but I thought I'd mention it here as well for additional context, so that we even reduced our debt further in 2024. However, we will actually stop here with the repayments as the only outstanding loan or debt position that we have is with our bank. And there, we have a repayment schedule in place of CHF 400,000 per year, which we will stick to over the next 3 years. So the goal is that we will reduce the outstanding CHF 3.2 million to CHF 2.8 million by next year and then CHF 2.4 million the year after and then to CHF 2 million in 3 years. So this is the road map we're working towards to reduce our debt further over the coming years. So I just thought it's important to go a little bit more into detail on this point because not only did we grow the company, but we also very, very strongly reduced debt by half even further into 2024. Now moving on to Page 7. You can see how the 2023 period compares to our most recent historic performance for KPIs. Sales were up 15% year-on-year as discussed. Members, the member base, which we haven't mentioned yet, grew by 6% to 70,200 members, so just over 70,000. And EBITDA, as mentioned previously, was unfortunately down by 16% for the period, although net profit, which is not shown on the page, was up 5%. Then on Page #8 and 9, we have an overview of the most important operational highlights of the year, which gives a bit more context on how the financial highlight numbers came about, most importantly, starting with the sales. The partnership with Emirates for our Prestige and Signature memberships allowed us to sell significantly more of these memberships this year and that was the #1 contributor to our sales growth. Then the ASMALLWORLD COLLECTION, with their hotel bookings, also increased by 29% in bookings, and we've seen an additional demand for First Class & More's business and First-Class Flight Services where we had a dip last year. So that came back strong this year and also contributed to the results. Then the partnership with Global Hotel Alliance led to a first service fee payment from GHA to us for the complementary memberships they were offering to their members. And we've also received the first dividend payment, as we've mentioned earlier, which also contributed greatly to the result. And with the ASMALLWORLD DISCOVERY business, we had signed the first 18 hotels of this new business, which is also a great achievement. At the same time, we also started to go into more tactical marketing efforts, including paid advertising and SEO tactics to push our products for the first time in a long period, and we started that in the first half already and continued in the second half. So this is something we will continue to experiment with, basically investing a bit to push our growth also in 2024. And if we move on to Page #9, the other points that I quickly want to touch on are the acquisition of jetbeds.com. As I mentioned, it's an online flight booking tool that will expand their setup of online travel booking tools. I'll mention that a bit later as well. And then also for our consulting business, ASMALLWORLD Hospitality, there, we had, unfortunately, no big project for the 2023 period, whereas in 2022, we had a very big project with the Ritz-Carlton residents in Dubai. So that business was unfortunately a bit down year-on-year. However, towards the end of the year, we actually scored quite a big win for one of our clients where we were involved to now build the first Rosewood Hotel in Barbuda in the Caribbean, and that should lead to a stable new longer project for that business. I also quickly want to touch on the lower EBITDA that you clearly will have seen in the previous slide, so we're down 16%. It's actually not down to 1 factor alone, but to a mix of factors. One is clearly the investments in key initiatives like ASMALLWORLD DISCOVERY. Also, we had higher legal costs this year, one, due to the court case that we have with ASMALLWORLD Hospitality for the Ritz-Carlton project in Dubai that is ongoing; and we also had a bit higher legal cost for the capital increase that we did this year; and then at the same time, we also had a bit of a product shift in mix. So we used to sell quite a lot of Miles & More Prestige memberships. This year, Emirates has been the better seller but it comes at a slightly lower margin. So that means that the COGS have actually increased quite a bit this year compared to last year's as it's a slightly less profitable product for us. So I guess all of these factors, plus a general increase in staff costs and also investments in the team, have pushed EBITDA down a bit this year. Now we will use the next few slides to provide a few more details around the most important focus topics. Many of them, I just briefly mentioned now. I'm going to give a bit more details. Starting with the strong sales contribution from our new Emirates partnership on Page #10. Like I mentioned, we started the partnership or we signed the partnership with Emirates actually already in July 2022. What that meant was that Emirates Skywards Miles became the third option of air miles for our Prestige and Signature memberships next to our previous bestseller Miles & More and Etihad. That obviously allowed us to expand the reach of those memberships, especially in the Middle East. And we then started selling the product in September 2022. And by now, the sales of this product have actually overtaken the sales of Miles & More, so it's been a clear revenue driver and 2023 has been the first full year where Emirates contributed. So if you want to know the single biggest source of the revenue growth, it was the Emirates Prestige and Signature memberships. And we will hope that in the future, we can actually find a couple of more partners like Emirates to broaden the offering of our Prestige and Signature memberships in the future. We have a couple of conversations ongoing there. But currently, nothing where we can communicate a new partnership at this stage. So Page #11, for those of you who need to put it in the context of what I'm talking about with Precision and Signature. At the moment, we have 3 memberships with ASMALLWORLD. The basic access to the community for EUR 79 and then our 2 premium memberships, Prestige and Signature for about EUR 5,500 or just under EUR 10,000 that come with many travel benefits and the most important one is the air miles. So those are actually the 2 memberships which have become the most important product that we have at ASMALLWORLD today. And we want to continue to expand the product offering there with other airline partners. And we're also experimenting probably very shortly with another membership with DISCOVERY dollars with our partner, Global Hotel Alliance. Page #12 gives you total of ASMALLWORLD Collection, how bookings have been developing over the last few months. So obviously, a very new business, the ASMALLWORLD Collection, our hotel booking engine comparable to Booking.com or an Expedia in terms of functionality, but focused on luxury hotels. We see bookings go up by 29% year-on-year. Space, which is actually banked bookings or bookings that have taken place within a year, grew by 24%, so that's a nice increase over the previous year, obviously, from a fairly low base, I have to say, because it's a new business. We can definitely ramp this up more. It's our goal. And to do so, we have hired additional staff to bring more hotels online to like make sure our data is current, and there's no issues with the system. It's pretty much an ongoing process that we have potentially been underestimated how high the maintenance required is. And -- but we have the staff in place now to do that, also to increase the number of hotels going forward. We're currently at about 1,500 hotels. The goal is to reach 2,000 this year and it has quite a comprehensive portfolio of luxury hotels all around the world. And we've also been trying to use SEO tactics here to bring new members to ASMALLWORLD Collection. But generally, we're very happy with how this has developed and we hope this will develop steadily or even accelerate a bit over the next year or two. On Page 13, a few words on the partnership with Global Hotel Alliance. Like I said, it's started to pay off in multiple ways. Just to go back, to put in context, we acquired a 10% stake in the company at the end of 2021. That was then sort of became operational in 2022. Global Hotel Alliance, or GHA, is the world's largest alliance of independent hotel brands, has about 40 hotel brands that run on the loyalty system, GHA DISCOVERY. And we've been working with them providing complementary memberships to their top customers, and we received the fee for that for the first time now in 2023. And also from a purely financial investment, the investment has also paid off as GHA had a strong business year last year, and they were paying USD 300,000 in dividends to us, which was actually unexpected. So they've been doing better than what we expected when we acquired the 10% stake in the company, which obviously makes us very happy and confirms that this is a good strategy to get that stake in ASMALLWORLD -- sorry, in GHA DISCOVERY. A third thing that is worth mentioning also in connection with Global Hotel Alliance is the launch of a ASMALLWORLD DISCOVERY, basically our own brand within the DISCOVERY hotel portfolio, where we wanted to position ourselves as a partner for independent hotels that wanted to become part of the GHA DISCOVERY loyalty portfolio. On Page #15, a quick overview. So we signed 18 hotels so far to join ASMALLWORLD DISCOVERY or join the GHA DISCOVERY loyalty platform. 4 hotels have been fully connected. Others should follow soon. We have to say that it's -- the demand for the product has actually been great. Having said that, the technical implementation has turned out to be a bit more difficult in a couple of areas than we had anticipated. So we're trying to address that issue jointly with GHA and we hope that we can actually ramp up or speed up the time from signing a hotel to connect it to the system, which is the time where we also do start make money. So we hope that will go smoother in the future, but we have learned from the process and we're addressing the challenges right now. Then Page 16, just a few words on the acquisition of jetbeds.com. You see I'm not talking about this as a major event. This is because jetbeds is actually not a huge business. It won't add a lot to our top and bottom line. It was primarily actually a strategic purchase of the booking engine for flights, so jetbeds.com offers first and business class flight bookings from pretty much all international players and does so in a very clever way that is user-friendly. So we felt that, that technology would actually fit in really nicely with our online booking capabilities and complements the online hotel booking capabilities that we have. And the goal is that over time, we will integrate the booking capabilities into ASMALLWORLD and into First Class & More. For now, we're running it as a stand-alone business, so we continue to run it as it was. And we're currently discussing the best way and the cleverest way to integrate it into our other portals. So we will update you as this becomes more specific. But for now, we basically just run it as a stand-alone business and use it to complement our online booking capabilities this way. On Page #17 is the consulting project in the Caribbean that I mentioned earlier. So ASMALLWORLD Hospitality, our consulting business for the hospitality industry, has reached quite an important milestone for its customer, Murbee Resorts. So Murbee Resorts was the client that ASMALLWORLD advised. They own a plot of land in Barbuda and they've been looking to develop it, find the right hotel partner for this, and ASMALLWORLD has played quite an important role to broker an agreement with the Rosewood Hotel Group. So it will be the first Rosewood Hotel Resort on Barbuda and ASMALLWORLD will continue to support Murbee Resorts as a partner for the development and then later also for the sale of the residential units. So it will be a consulting fee project, but also once we go into sales mode, sales-based performance fee for us, which can become very interesting in the future, but we're still a bit out from that. But overall, very great development, great win and should be a steady consulting project for us for the years to come. So after the financial and operational highlights, which hopefully give you a bit more context, we're now moving on to reporting of our 2 business segments, Subscriptions and Services on Page 19. Starting with the Subscriptions business, our bigger business, which is about 70% of our sales. We grew the business by 13% from CHF 13 million to CHF 14.8 million. EBITDA has been reduced from CHF 1.7 million to CHF 1.2 million. And correspondingly, the EBITDA margin went down by 4.6 percentage points from 13% to 8.4%. Growth came, like I said, from the strong demand for Precision/Signature memberships, primarily the new Emirates option. However, higher costs for the Emirates miles has sort of also led to a lower margin. That was 1 reason. And then on the other hand, we had also smaller increases in staff costs that contributed to the lower margin. On the other hand, also worth mentioning increase in -- of 6% in the member base across the businesses and also First Class & More has done quite well, with selling memberships for its Gold and Platinum memberships. Although the quite lucrative Diamond membership level has slowed a bit, also reducing margins at that stage. For Services, this is actually a great push this year. Last year, we had flat growth or like 0% growth compared to 2021. Now in 2023, the business -- or the Service business grew by 20% from CHF 5.4 million to CHF 6.5 million. The reason for this is primarily the demand for First Class & More's business and First-Class Flight Packages. So on the back of quite strong demand for travel in general, the ASMALLWORLD Collection also contributed its growth of 29% of bookings. Global Hotel Alliance gave us -- or paid us a first service fee and we had ASMALLWORLD DISCOVERY also contributing marginally with their first few fee income there. On the other hand, like I said, we didn't have the contribution from ASMALLWORLD Hospitality like we had in 2022, so that was mixing a bit. But the other parts of the business made up for that and we had a 20% plus in revenue at the end. So now after the segment reporting, let's also look at the consolidated income statement on Page 22. There should be no real surprises here. Everything has been mentioned. So top line grew by 15%. Direct expenses, up by 26% due to the shift mix -- sorry, mix shift that I mentioned earlier. We've also seen smaller increases in personnel, R&D and other operating expenses due to the factors I mentioned earlier. And the EBITDA, down 16%, but then due to very high financial income this year, we had a net result that still grew by 5% year-on-year. Moving on to the balance sheet on Page 23. That's the first part. So the asset side of it, actually no major shifts here. Balance sheet shrunk a little bit due to what I mentioned earlier. So the cash position moved from CHF 4 million to CHF 3 million, but at the same time, we had an increase in financial assets. That was sort of the purchase of the financial assets that I mentioned earlier, which is already now, after the close, been changed back to cash. And then if we move to Page 24, where we actually have a bit more going on, you'll see primarily the effects of the discussed debt reduction, which is clearly visible in the strong reduction in long-term financial liabilities, which moved from CHF 8.6 million to CHF 3.6 million. Short-term financial liabilities stayed the same to the annual reclassification of a long-term debt that has now -- is now coming to repayment within the next 12 months. And in addition, payables and deferred income were reduced a bit as they were quite inflated at the end of 2022 due to a December Miles & More Prestige sale, which then put these numbers to quite high mark by the end of 2022, which did not happen in the same way at the end of 2023. So all these numbers or these positions normalized a bit. Then moving on to Page #25 our cash flow statement. The one on this page is the operating cash flow view. So operating cash flow reduced slightly year-on-year, mainly two effects. In the operating working capital, you see, for example, there was a decrease of receivables from Services and there was also a decrease of other short-term liabilities and accrued liabilities and deferred income. Those 2 numbers mainly impacted again by the high sales volume of Miles & More Prestige memberships, which were promoted at the end of 2022. So again, this is sort of a normalization, I would say, and that explains the drastic shift in these numbers and the change in working capital. Then on Page #26, we're moving on to the cash flow from investing activities. So in 2022, like I say, there were quite a few changes here. In 2022, we had 2 big payments. One was the outflow from acquisition of subsidiaries. This was the last earnout payment to First Class & More, which was also the milestone that made us self-funding that this payment has been made, which is great. And then we also had a CHF 3.3 million payment in 2022 for investment of financial assets. That was primarily the payment for the stake in GHA. Both of these positions have changed quite a bit in 2023. So there were no outflows from acquisition of subsidiaries anymore because these payments have stopped and the CHF 1.2 million that you see in the outflow for investment of financial assets, that was the financial asset in the luxury hotels and that has been mentioned a few times already, which has now been changed back to cash in 2024. And on Page 27, we see the cash flow from financing activities and the change in net cash. So from financing, we primarily see the repayment of financial liabilities that happened in 2023, again this is due to the repayment of the Pellegrino capital loan, the bank loan and the call it portion, COVID from the government that made up the CHF 1.1 million, CHF 1.2 million there. And then if you look at the net change in cash, that was reduced by CHF 1 million overall to summarize the changes for the period. To conclude the presentation, I would like to give you a brief outlook for the business on Page 29. On the sales side, we believe that we will continue to steadily grow in 2024 driven by continued demand for Precision/Signature memberships, potentially some expansion of those products or new options. We also believe that our business can grow in 2024 or other business can grow in 2024, specifically the ASMALLWOLRD Collection, which we put our hopes on. At the same time, this year or next year will also be an investment year for us. And we want to make that very clear that this is how we see the year, to make a few strategic and tactical investments into the business. There are many of those. So ASMALLWORLD DISCOVERY need some money like and jetbeds, well, also probably, we'd need a bit of money to be reconfiguring the way we want to run it. But 1 important aspect will also be the change of the ASMALLWORLD membership structure, which we hope to carry out at some point late summer this year, which is actually quite substantial. And to illustrate that point, I will turn to Page 30. So this is the ongoing business transformation that we've been on over the last few years. So there are actually 3 strategic elements to it. One is the number of businesses that we operate, where we wanted to move from a single core business to a multi-core business or a group of travel businesses. Along with that, as a diversification of our revenue streams or monetization from a single source, selling basic ASMALLWORLD membership through multiple sources, selling multiple revenue, selling multiple memberships having quite a diversified Service revenue business. And then the third one is actually to change the size of our community from a small community to a larger community. And we have made quite a lot of progress with the businesses we've seen, where we'd be adding new businesses to our setup. And with that, we're also diversifying the monetization structure, and we're adding more revenue sources to our business, but we still need to actually increase the community size to drive that business. And to do so, we will present a new membership structure for ASMALLWORLD later this year, which will most likely feature a free membership level to ASMALLWORLD with the intent to drive scale and to bring more people into the community, obviously, with the intent to then have them trade up to our memberships or also then, if they not trade up our memberships, then go and sell them hotel bookings or other services, so that they will spend money with us. So that's the strategy, and it's a bit too early to present a fully-fledged strategy here, but we will inform you and our shareholders about the details of the change when the time is right, which we expect to happen a bit later this year. To conclude this with the last content slide on Page 31, I also quickly want to talk about the guidance, the financial guidance of 2024. Like I said, steady growth is what we're anticipating. So we will probably get to CHF 23 million to CHF 25 million this year in terms of sales. So that's the target range we're aiming for. For the members, we hope that we get to something like 73,000 to 74,000. However, if we change the membership structure with ASMALLWORLD, that creates quite a bit of uncertainty. So this might not be where we come out this year. So we have to see what that will mean for the number of members that we have. And for the EBITDA, we're being quite cautious this year as we see this as an investment year and also with the change of a membership model, that might create quite a bit of impact on the money we make this year. So it might well be that we create a short-term dip to then ramp up our earnings potential long term again. So we're being a bit cautious in the forecasting or guiding everyone that we will probably reach CHF 1 million to CHF 1.2 million in terms of the EBITDA this year, although there is quite a bit of uncertainty about the exact number at this stage with the changes that we foresee for this year. Yes. So this concludes my presentation of our 2023 annual results and I'm happy now to go into the Q&A section of the presentation.

[Operator Instructions] And the first question is coming from Henry Wendisch from NuWays.

I have a couple of questions for you. I'll start with the last topic you were mentioning regarding the investments to also lower EBITDA. What kind of investments are we talking about? Is it mostly marketing expense to push the product more? Or is it also investment in personnel, i.e., the development of product offering and type of personnel so you can basically enhance the product offering?

Henry, thank you for your question. Yes, it's a very fair question. It will be a mix. I would -- you mentioned 2 categories, I think might be 3 that we're looking at. So one is actually investment in team. So we might have to hire a few people here and there to speed up the process. We've actually been doing this already in the tech team over the last year. And we've been doing it with ASMALLWORLD DISCOVERY as well. So we've been increasing our staff cost a bit and that might have to continue in order to get the revenue from those businesses that we would like to have. And so you were right there. And then the second one, yes, marketing and sales might be one, but it might be a smaller one. So we've been experimenting more with also advertising and SEO optimization, which some of it is paid advertising and there it's just people doing the right thing with our websites and positioning them in the right way, which we will continue. This is -- however, it's a small cost to put it in context. And the third one, is actually it might be an investment in terms of lost revenue through a transition period. What I mean with that is if we are going ahead with ASMALLWORLD, and we are offering the free membership level, which we believe will, in the long term, bring more people into ASMALLWORLD, which, in the long term, will also increase membership sales, it will drive eyeballs and people supporting our Service business, there might be short-term costs for that in the sense of a trade down from people that are currently paying for membership and let's say, well, actually, the free membership is enough for me right now. So I'm mainly thinking of all the customers that are currently purchasing the membership for EUR 79 per year. Because in order to have a free membership that will actually attract people, we have to give away quite a few of the features that are currently part of the paid EUR 79 membership for free. And it's obviously quite a delicate balance in giving them enough so that they're staying with us and invest in time, but not giving them enough that they no longer trade up to paid membership. But it will be pretty much a freemium type of model, where you have to give away some of the features for free with the hope that a large enough portion of your members will trade up to the paid membership. So in short term, there might be quite a few people that opt to trade down from a paid to free membership, which would cost us, obviously, which would hurt our bottom line short term, before we then ramp up to a scale where this will be compensated by just having a lot more people in the community. So that's the third factor, I think, that we need to factor in. And obviously, it's going to be quite hard to anticipate because we don't have any historical numbers to go back to and see how much that will be exactly. But we can anticipate that it will be a factor in such a transition. And I hope that answers your question.

Yes, actually, pretty well. But yes, given that it's hard to estimate, do you have like a ballpark figure for us given the revenue loss, assuming everybody who has the basic membership now for EUR 79 will start the [indiscernible] 0 base free memberships?

Yes. I mean I would say at the moment, if you look at there's roughly CHF 1 million lower EBITDA, right, in there, I would say, roughly half of that will probably be lost revenue and half of that will be investments into team and marketing and so on, to give you sort of a rough idea of how we're calculating that.

And then also regarding marketing, again, how -- I mean, you've been doing it the last year already. How [indiscernible] or do you like the KPIs? Is it working for you? Or is it where you see for this year, maybe the customer acquisition costs are rising, is getting less favorable? Or are you happy with the overall paid marketing [indiscernible]?

It's a mix, to be honest. So we've run some campaigns where we've been really, really happy with how they turned out. I mean we've been doing it across our business a bit. So we've -- I mean, obviously, I never wanted to confuse people too much, but we have obviously ASMALLWORLD First-Class & More, we have then the Collection that we kind of look at a bit separately because it's [indiscernible] hotel booking, which you can also advertise directly, The World's Finest Clubs and so on. And we ran a few very interesting ones in the First Class & More side, which kind of yielded the results that we wanted to have. We've done a few on the ASMALLWORLD Collection, which have sort of had promising results, but we've seen it's actually quite a bit of work. It's not just the financial part; it's also the manpower that you have to put in to run it. We have, for ASMALLWORLD actually decided not to run any because in anticipation of the model change, we thought that, that would probably not lead to the desired outcome. And we had run a few trials on The World's Finest site with, I would say, mixed results. So what I'm saying it -- I would say we still haven't found sort of a consistent approach, like consistently been yielding results that we wanted to have. But having spoken to quite a few experts in the field and also having them consult with us, I feel that that's the general idea, that you just have a lot of trial and error to find them -- find a model that works for you and even if it works today, it might not work tomorrow. So we'll keep experimenting, but we do it, obviously, responsibly with smaller amounts before we see that it works and then hopefully, scale it up as we go along. But I'm -- so I'm going to go a bit beyond your question now, but also the idea with the freemium setup for ASMALLWORLD is a bit to compensate the unpredictability of paid marketing. So I mean, one way to look at what we're doing now with the ASMALLWORLD is to say we are running an online community in luxury travel and we're giving away content for free and entertainment and everything that might interest people. But in return, we have them on the platform and get their eyeballs and have a chance to sell them other stuff, which is, in this sense, you could say, the free membership level that we're offering is one way of marketing or advertising to catch people's eyeballs and to bring them into our community. So I would say our marketing strategy now is not only paid advertising, which we're happy to continue to experiment with. But like I said, with mixed results and not always consistently yielding the results we want. But we will complement that with our free setup for the social network, which hopefully will become the stronger driver of customer acquisition than the paid marketing.

Right. Got it. And once the premium model is accessible for customers, is it only accessible by referral from existing members? Or is it we do use for everybody who wants to sign up?

Yes. It's a fantastic question. And one of many debates internally, to be transparent. So we've been trying to balance a few things. We've been trying to balance the sense of exclusivity with our business goal to grow. Right? And some people see this as completely at other ends of the spectrum and very conflicting. Because you can't be exclusive if everyone's part of it and so on. Right? So that kind of train of thought. But the other one also is you can still be open and still be very focused on the premium product or a luxury product or play in that part of the market, which is what we're trying to do. So my analogy is something like if you have -- to say that as an example because I have been working with them. So we have a -- if you have a Rolls-Royce club, right, they're basically not closing the doors to anyone, but you probably only end up being there if you either have a car or a really strong interest in the topic. And so we're trying to recreate that mechanism in the sense that with the change in the membership structure, we will more strongly focus on luxury travel. So there will be a slight change of tone in how we define ourselves, what we -- how we market to people what we're doing, which, in essence, we're doing already with the hotel platform and everything, we're pretty much focused in luxury travel. We just don't have an adjusted -- the marketing speech fully to this. So the idea is that the change in the membership model is -- goes hand-in-hand with a strong positioning in luxury travel. And through that, creating a stronger self-selection for people that actually have an interest in luxury travel and want to be part of a platform that is focused around luxury travel. And so the -- sorry, it's a long answer, but the platform will be open, so you don't need a referral or anything by anyone, so you could potentially just go and sign up without any sort of any hurdles. But we will make it very much more focused on luxury travel so that you wouldn't really go sign up if you weren't interested in the topic and keeping the exclusivity and the topic of focus through that. Side note, in terms of keeping confidentiality and making the platform free of scammers and sort of all the kinds of content that you don't want, we will have a system where people can only contribute to the platform. So I mean like they can write stuff by comments and post and so on, once they've gone through a verification process. So we kind of keep the security on the platform and the safety there, by not allowing people randomly to create accounts and post whatever they want. So we kind of keep that in check. It's a bit of a complicated mechanism, and we opted for that approach, which we will take and we're still 90% there, but still putting the final touches on, which hopefully strikes a good balance between staying relevant for a luxury travel audience in keeping a sense of the exclusivity, although that's probably not the right word, but prestige which may be the better one, while at the same time not putting hurdles in our way for both, which we want to have.

Perfect. Yes, so really like a balanced approach then for the luxury travel [indiscernible].

Yes.